How are the emerging donors (from China to Azerbaijan) changing the aid business?

Oxfam’s ‘BRICSAMIT’ group (BRICS + Mexico, Indonesia, Turkey) is now up and running and doing some innovative thinking about the role of the emerging powers, including their role as donors. Here Russia/CIS regional researcher Daria Ukhova (right) explores recent developments.

While the eyes of many international aid observers are currently on the BRICS bank (already discussed in this blog), another trend has yet to get much attention. In the last two years, several emerging powers have either opened or announced plans to establish their own international development agencies (or similar administrative units). They include:

- possible ‘re-establishment’ of the Brazilian Cooperation Agency (ABC) / creation of a new development and cooperation agency (announced in late May 2013 by President Rousseff).

It’s not just the BRICS, or even the ‘next 11’ or the CIVETS. Azerbaijan opened its international development agency, AIDA, in September 2011.

The trend is not completely new: some Gulf states and Turkey opened their agencies many years ago. Nor is it uniform: China – one of the largest donors in the group – has not yet consolidated its development assistance under the umbrella of a single agency, although it is strengthening its coordination of aid efforts. As the first White Paper on China’s Foreign Aid (2011) explained, the Ministries of Commerce, Foreign Affairs and Finance established a foreign aid inter-agency liaison mechanism back in 2008 and upgraded it into an inter-agency coordination mechanism in February 2011.

That said, the trend is clear, and raises several questions.

Why? Why now? Most of the ‘emerging’ donors have assistance programmes stretching back to the 1950s. So, why have so many of them decided – quite recently and rather simultaneously – to institutionalise their aid efforts? On the one hand, this could simply be a response to the need to effectively manage significantly increased aid volumes in recent years. Moreover, DFID, the World Bank, UNDP, USAID, etc. have recently supported projects aimed at institutionalising several countries’ aid efforts.

On the other hand, this ‘trend’ is also a sign of the emerging donors’ aspirations to a stronger position in the multi-polar world, giving moreweight to their philosophies and modalities of aid giving. Are we witnessing a deliberate attempt to shift the centre of gravity of the global aid business? The establishment of these new institutions signifies that providing aid will no longer be ad-hoc; instead, as was once the case with the traditional donors, international development aid and humanitarian response are becoming substantial parts of the foreign policy of emerging powers.

What’s old and what’s new about these new agencies? Are the ways in which these new agencies will operate significantly different from those of ‘traditional’ donors? It is too early to draw hard conclusions, because some of these agencies have not even started operating yet, but several distinctive traits already stand out:

Principles of South-South cooperation at the core. All the agencies – except the Russian one – have openly proclaimed South-South cooperation as their founding principle. Roscooperation’s strategy is being formulated at the moment, but the agency is viewed by the authorities primarily as a tool of ‘soft power’ to advance Russia’s interests abroad and raise its profile as a donor. We still need to wait and see, however, whether and how the rhetoric translates into the programme activities of the new agencies.

Thinking regionally. All the agencies are expected to focus their efforts at the regional level and also, in the case of Brazil and India, on Africa.

As in most traditional aid donors, these new agencies have close ties with ministries of foreign affairs.But in some of the new donors, such as Brazil, ties with the Ministry of Development, Industry and Commerce are increasingly important. Whether this kind of move would be reproduced in the other countries remains a question, but Brazil’s example does signify increasing blurring of the distinction between aid and investment, and we can expect that the form that the new agencies eventually take will reflect this.

Interestingly, while most of the agencies manage/plan to manage both multilateral & bilateral aid (similar to traditional donor agencies), in Russia,the agency’s role will be confined to dealing exclusively with bilateral projects. Russia aims to increase the share of bilateral aid in its overall aid and thus to increase its visibility as donor. (Until recently, Russia’s bilateral aid had a miniscule share, since aid was managed primarily by the Ministry of Finance, largely consisting of contributions to the UN bodies.)

It seems likely that triangular cooperation, which, for example, Brazilians are already following with USAID in Africa, will beemphasised at least in some of the new agencies’ strategies (e.g. triangular co-operation is part of SADPA’s strategic orientation).

Some of the new agencies (e.g. AMEXCID) have already shown great interest in partnering with the private sector – a trend, which is clear also among the traditional donors. The private sector has its own Technical Council at AMEXCID.

Finally, while creation of the agencies could be considered as a step towards improving the measurement and monitoring of effectiveness of aid coming from the new donors, it is still not clear what kind of practices will underpin this. Will the new agencies be following the fads of the traditional donors, e.g. results agenda, RCTs, etc.? Or will they come up with alternatives?

How (if at all) can CSOs influence the policies of the new agencies? That’s probably the most pressing question for us at Oxfam and for our NGO colleagues.

In India, the Development Partnership Administration has supported the creation of the Forum on Indian Development Cooperation (FIDC), in which Oxfam participates. This provides a space for civil society to directly engage with DPA officials on issues such as transparency and accountability.

In Mexico, the Law on International Development Cooperation includes the participation of CSOs in the Advisory Board of the new agency, but does not grant them a right to vote. Under former president Calderon’s administration, a number of CSOs were invited to form a Technical Council to advise the Executive Director and the Advisory Board of AMEXCID. Along with other 11 CSOs, Oxfam accepted. However, CSOs’ involvement depends on the political will of the government, and there have been no follow-up meetings under the current administration.

With this newly opening space the question that, however, remains is how much interest do national CSOs actually have in their own governments’ aid programmes? And how does it affect the relationship of international NGOs like Oxfam with the national CSOs?

What’s the ‘bigger meaning’ of the ‘new agencies’? The decisive entry of these new donors is likely to create/exacerbate a competition among traditional donors and emerging powers, with each side claiming that their brand of aid benefits the poor more and brings ‘real’ development. That in turn prompts some bigger questions. How to distinguish between a propaganda war and real concern for equality and the interests of poor people? Is this competition a good or a bad thing for the poor? What can civil society do in order to protect the rights of the excluded and the poor in this fast changing environment?

To conclude, we are clearly witnessing an important and potentially transformatory development in the international aid landscape. To understand what exactly is going to happen and the role of global civil society in this process, the questions that I raised in this post will certainly require further thinking and research.

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Lots of these countries are still recipients of aid from traditional donors and while I guess that is likely to be ending over the next few years ,what’s view within these countries about still being recipients of aid at the same time as being donors?

Thank you for this great post, it is important that we recognise what is different about south south cooperation and seek to support it as needed. Coincidentally (or not?) this week the Global Patnership for Effective Development Cooperation has just launched an e-debate all about south south cooperation – asking some of the questions you pose and even the question that Ken has just raised above. We would really value your contributions and those of others to the debate – so please join it as soon as you can. If there is one forum in which NGOs have the potential to influence others, it’s the Global Partnership, due to its very wide membership and principle of equal membership…:

Great article, on a very interesting topic. I would recommend Emma Mawdsley’s book ‘From Recipients to Donors: Emerging powers and the changing development landscape.’ for a very detailed account of the changing development scene. Good read if you want to go further on these emerging donors’ “philosophies and modalities of aid giving”.

Thanks for a fascinating post. There is clearly a new trend emerging here, but how significant it is for aid overall will depend on the current and planned scale of the emerging donors’ aid budgets. With total annual aid from established donors totalling around US$120 billion, the new donors’ contributions are only likely to be significant at global level if or when they reach US$ billions per year. Anybody got any good data on the scale of the new donors’ aid budgets?

I do believe that emerging powers are game changers in the development aid landscape. But not because they are ‘new’ donors. In fact, aid budgets of emerging powers are relatively small, if you exclude the lines of credit that are usually presented as an integral part of South-South cooperation. For example, India’s yearly aid budget amounted to around US$ 800 dollars in 2010, while Brazil’s aid budget amounted to around US$ 500.
The picture changes completely if you include the lines of credit. The Indian Exim bank extended US$ 7.7 billion in lines of credit to developing countries of which 50% was directed to Africa, as of 2012. Likewise, the Brazilian development bank BNDES extended US$ 3.7 billion between 2005 and 2009.

It is the link with commercial lending and investment and the promotion of a different philosophy of development and cooperation (South-South) that explains their real influence in the changing aid landscape. Emerging powers have been very successful in changing the thinking on development cooperation, but not (yet) in establishing a different practice that is really developmental.

Daria, thanks for the analysis of recent developments in the AID sector. In addition to these valid methods, some new donors like China are introducing ways in which accountability stays with the donor. For example, by hiring Chinese labor and contractors to supervise and build donated infrastructure projects like hospitals, commercial buildings, etc in Africa. They manage to kill many birds with one stone including – 1) projects are completed and usually on time therefore 2) issues of funds/assets mismanagement are minimized 3)job creation for their citizens 4) capital flight since donations in form of fees return to China 5) also transfer culture, skills, expertise, and jobs to Africans working alongside them

This may be the newest and best form of development aid to date and I would like to see more partners adopt it.

Thanks very much Daria for this very interesting piece (and Duncan for the post)

Many of these issues are of strong interest for the African context, and as you conclude, a lot more research and analysis is needed to really understand this new trend in the aid landscape. Including looking at some perceptions rumours, and even fantasy about these emerging South-South cooperation experiences.
In this regard I would like to highlight a very exciting recent research produced by CIRAD (France) on agricultural cooperation of Brazil and China in Africa.
It contains very interesting information for instance on triangular cooperation attempts between these ”emerging donors” and traditional ones from OECD in Africa (including projects between China and DFID in Ghana, or Brazil and Japan in Mozambique).
And there is also a very interesting section on these perceptions and rumours about Chinese and Brasilian agricultural cooperation, deconstructing some myths heavily conveyed by Western (and African) media and (sometimes) researchers.
May be the problem is that this study is in French …. time to add this new linguistic competency to your already impressive polyglot skills !
Warm regards.

Dasha, thank you very much for the post. I just wonder if there has been any attempt to link the emergence of national aid programs to the particular level of GDP (or GNI) growth reached by the country. I would assume it is the ability to afford aid giving and hence certain degree of national wealth (as opposed to other considerations) which bring BRICSAMIT countries to the donors club. In the case of Russia, “let us become a donor” talk emerged in the peak of the Chechnya conflict in early 2000, where Russia was aid recipient itself. This was also the period, when oil prices started quickly growing and Russia managed to accumulate considerable wealth.

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This is a conversational blog written and maintained by Duncan Green, strategic adviser for Oxfam GB and author of ‘From Poverty to Power’.
This personal reflection is not intended as a comprehensive statement of Oxfam's agreed policies.